Monday, August 15, 2011

Roubini: Taxes Are Going to be Raised at the Federal, State and Local Levels

Nouriel Roubini is out with a paper titled, Is Capitalism Doomed?

Since I can't buy into the notion that the way current global economies are run have anything to do with free market capitalism, I must dismiss Roubini's question out of hand. Free markets have nothing, i.e. zero, to do with a macro trends in an economy where central banks manipulate the money supply.

Thus, even this Roubini comment does not move me:
So Karl Marx, it seems, was partly right in arguing that globalization, financial intermediation run amok, and redistribution of income and wealth from labor to capital could lead capitalism to self-destruct (though his view that socialism would be better has proven wrong). Firms are cutting jobs because there is not enough final demand. But cutting jobs reduces labor income, increases inequality and reduces final demand.
This comment is a mixture of Marxism and Keynesianism  viewing central bank planned corporate cronyism and hinting that it is somehow a failure of free markets, when it is nothing of the kind. Show me a country without a central bank and this kind of failure and then we can talk.

The one point I do take away from Roubini's commentary is in the area that he has demonstrated expertise and that is not in the area of economic theory. He is an expert in knowing what insiders are plotting. In the vernacular of the day, he knows what is coming down. When he writes (my emphasis):
Even in the US, state and local governments, and now the federal government, are cutting expenditure and reducing transfer payments. Soon enough, they will be raising taxes.
He knows of what he speaks. This is what the planners are plotting, higher taxes. Be prepared.

(Via James E. Miller and Andre Grillon)


  1. Produce a crisis, enslave the people further. This is how state terrorism functions. Are the Greeks the fools? Or the Germans?

  2. To anti-capitalists, any problems had in a less-than-100%-communist society are the fault of capitalism.

  3. In the Communist Manifesto Marx included ten points that he believed would help accelerate the collapse of Capitalism so that the Communist revolution would be initiated. Point 5 reads “Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.”

    By Karl Marx’s own writing in the Communist Manifesto, a central bank (i.e. the US Federal Reserve) is intended to attack Capitalism. Here is evidence from Marx that the natural formation of “Capitalism” by human action does not produce a central bank. I completely agree with your position that a Central Bank is NOT part of Capitalism and your further contention that using evidence of problems created by Central Banking is not a fair criticism of Capitalism. Just remember, Marx did not intend to be fair, he intended to cause problems and blame Capitalism.

  4. Its amazing how academia explains the effects of competition in about as fallacious terms as possible. Did they think that the western countries and especially the US would keep the wealth all to themselves forever? Sadly, we are slowly pricing ourselves out of the global economy.

    The bottom line is that the US is not the only game in town as it was even 50 years ago. Thanks to technology most companies can be run by people located all over the globe. At my last company it was run out of the Bahamas with manufacturing in China and engineering in Germany and Sweden. Our engineers in Germany could program and run the machinery in China and our logistics team could make sure good got from China to everywhere else in the world from the Bahamas.

  5. There is one good thing about Marx: he was not a Keynesian. —Rothbard